What Is Insurance?

Wasn’t insurance invented by Dutch businessmen who recognized that capitalizing trading ships was risky? Pirates, shoals, gales, rum-soaked captains (predecessors to the captain of the Exxon Valdez), any could scuttle a huge investment quicker than you can say “Titanic” or “Captain Jack Sparrow.” Charging a premium for each trip would spread the risk and minimize the pain.

Fast forward to 20th century, the USA, and mandatory car insurance. Okay, we skipped some steps; insurance evolved from protecting shipping investors from Cape Horn storms to protecting all sorts of businesses and private property owners from risks.

The basic principle of casualty and liability insurance is sound: make sure that every business venture has a pool of money to cover losses suffered by the insured (casualty insurance) and third party victims (liability insurance).  The result: a broad slice of society shares the cost of creating a fund to protect the injured.

Next we get to car insurance. This is currently important because people like me analogize mandated car insurance with mandated health insurance. Yes, there is a difference: car insurance pays only when there is a loss (property damage or personal injury), while health insurance is supposed to pay for regular care as well as catastrophic illnesses.

Every state in the Union requires automobile liability insurance to be purchased for all motor vehicle drivers. These laws require sharing the risk for protection of the public. But only a few states, maybe only Massachusetts, require all residents to purchase health insurance. Arguably such a law protects the public as well, enabling the poor and working classes to have coverage, while relieving hospitals and clinics of absorbing enormous costs caring for people with no money.

If a state adopts a law requiring universal health care, paid for by employers and employees and supplemental risk pools, plus Medicare and Medicaid, does anyone complain that’s unconstitutional?

If some states have better health care laws than others, they may attract people with health care needs and no money. Don’t we need uniformity across the country? Otherwise the deadbeats and the desperate will move to Massachusetts or Wyoming.

In Gillette our public hospital sports big new signs informing people in two languages that they cannot be turned away if they have no insurance or money. Any time services are free, abuse is invited. Regardless of abuse, people admitted for free but expensive care create huge losses which are absorbed partly by the public hospital, partly by taxpayers, and mainly by the rest of us who pay for service.

Is it any more unconstitutional for the health care system to cost me thousands of dollars per year in insurance and co-pays to subsidize care for those who do not have coverage, (which is happening right now), or is it more unconstitutional to require everyone to obtain coverage?

To whom is the burden “unconstitutional”? Small businesses who struggle to offer employees health care benefits or watch the employees go down the street to a better offer or go broke when they need the hospital? Doctors who turn away Medicaid and Medicare patients to skim the cream off the well-insured pool? Hospitals which absorb the costs of treating the uninsured? Taxpayers who pour their hard-earned revenues into black holes subsidizing people who will not or cannot pay their fair share?

Sage Grouse Perspective Time: The draft, long since unlamented, is not unconstitutional. The income tax is not unconstitutional. Passports are not unconstitutional. Social security numbers are not unconstitutional. Federal subsidies to highways, schools, sewers, water systems, irrigation, farming, housing, clean water and the environment are not, however much deplored by certain constituencies, unconstitutional. Why is insurance reform unconstitutional?

The U. S. Constitution created a tripartite government. Congress analyzes policy and makes laws. The courts protect us from oppressive majoritarianism. The courts do not substitute their policy judgment for that realm entrusted to Congress. This is great theory on paper, but messy in implementation. Congress has abandoned rationality and non-partisan policy making in favor of polarized histrionics which make a rabid skunk look sane in comparison. Bloody messes invite the sharks. Congressional messes invite intervention by the courts, right or left, right or wrong, perceived as activists when they, uh, act.

The scepter of majority rule is hot like a potato, juggled from Pelosi to Cantor, oh I am so sorry, I mean Boehner, to who is next, Gingrich again? Well, no, the speaker of the house is not an elected position, even though two heartbeats from the White House. Which reminds me that Dick Cheney’s heart, now in a secure garbage can outside a naval hospital, could have failed at about the same time that George W suffered the near-fatal choking on a chip episode while watching TV in his private quarters. Oh my God, George W choked out and Cheney stroked, the next President would have been Tom Delay!! What is wrong with this constitutional picture? Tom Delay as President? All because of an impulsively ingested potato chip while the TV was tuned to what? And Dick Vader on life support.

When James Earl Jones publishes his memoir, one chapter will be: “Darth Vader: I channeled his voice but Dick Cheney channeled his soul.”

The phone is ringing but I ain’t answerin’.  The “Off-Topic” alarm is sounding. Weren’t we talking about health care?

Yes we were. Boys and girls, what did you learn today?

  1. Dick Cheney’s new heart means he can run for President as a 45-year old in 2016.
  2. The Sage Grouse doesn’t like Dick Cheney.
  3. Complex issues like the environment and health care cannot be rationally resolved by a constitutional model invented in the 1700s when the most advanced technologies were muzzle-loaders and mule harnesses.
  4. Pumping hundreds of millions of dollars into unrestrained political campaigns, money which could have been used to feed and educate people, is an obscenity blessed by the same Supreme Court which formerly said that it would recognize pornography when it saw it. Apparently not.
  5. Health care should be a fundamental right, but not a selective burden.

Back to Dutch foreign enterprise. Insurance premiums spread the risk and spread the pain.  The alternative: some investors suffer total loss, and some innocent victims suffer total loss.

Contrast Obamacare: Insurance premiums spread the risk and spread the pain. The alternative: the rich pay for care for the poor and shrug it off; the middle class pays for care for the poor and can’t afford it; the poor take advantage.  And some victims fall through the cracks, which is why bankruptcy courts are so busy.

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11 Comments

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  1. Yo SageGrouse I know I am responding to this a little late,– I think you should publish this article word for word in every newspaper across this wonderful nation. Maybe then all those idiot radicals out there that want to repeal ObamaCare might FINALLY wakeup to the fact that WE Americans need this for the GOOD of the country.

  2. Sage Grouse-You are ultra sage here and grousing about health insurance is a polite word for what I do every month when I write a check for $1500 for a $5,000 deductible policy I am stuck with due to pre-existing conditions another insurer would exclude from coverage. A single payor system was and is the only correct answer to this problem. The Affordable Health Care law is modeled on a Heritage Foundation proposal that was the Republican response to Bill and Hillary’s attempt to fix health care in the early 1990’s. I wonder what changed in the intervening 20 years to cause that same idea advanced by a Democrat as a “compromise” to a single payor system to be “unconstitutional” infringement of the Commerce Clause. To paraphrase Rick Santorum, sometimes what happens in our government makes me want to “throw up.”

  3. When we consider the inefficiencies of whether care for an injury should be paid for by Worker’s Compensation, private health insurance, automobile insurance, hospital cost absorption, Medicare or Medicaid; with all of the salaries, postage, paper, legal costs, etc. consumed by such processes: maybe we should go to a single payer system. “OH NO!! this will lead to rationing of health care” say some factions. Well, what do we have now? My own pre-existing conditions are being excluded by my new carrier because I had a high-deductible policy for a year. Medicaid patients are turned away from many private clinics. There are other examples. We already have rationing. Here’s a link to a good analysis, sent to me by Leslie Petersen:

    Subject: Health care: Has Wyoming ever considered something like this?

    Here is an article from Forbes magazine, hardly a hotbed of socialism.

    http://www.forbes.com/sites/rickungar/2012/04/06/a-dose-of-socialism-could-save-our-states-state-sponsored-single-payer-healthcare-would-bring-in-business-jobs/

  4. Insurance is only partly socialism. It socializes the risk and privatizes the profits.

    Makes me think Stalin was CEO of one of the largest Insurance Companies of all time (but maybe that record has been broken recently?)

    I have a problem with mandated insurance purchases (auto *or* health): it benefits the insurance companies too greatly, imo.

    I’m all for a single payer option. I can’t figure out why people who think “gov’t ought to be run like a business” (although it shouldn’t be) don’t think “government” should get into the insurance game? The FIRE industry is a huge economy and the Federal Gov’t could really pay down the debt if it got into that game!

    Go USA!

    I’ve been wondering why Wyoming doesn’t provide a single payer option, take a cut and put it towards some real prevention programs and disease control studies. I’m almost positive Wyoming’s population is perfect for this. I think the economics are there right now. If not for the entire population, perhaps just for those employed in the public sector which is a huge slice of the general population.

    But, aside from insurance, look at the expectations of Hospitals and Doctors, etc. Does it make sense for them to expect a 10% to 15% increase in revenue every year?

  5. Car insurance is portable across state lines…why is health insurance not? Don’t get ill on vacation “out of network”, as you will have to pay more for the same care. States currently determine what health insurance companies must cover and they are all different. While I don’t believe the Federal mandate is constitutional, the states need to standardize insurance requirements and let free market competition reduce cost. I would buy health insurance from a company in California if it provided the same coverage, but was less expensive. Of course, this was not modeled into the Obama health care law…oops Affordable Care Act.

  6. I seem to offend one of our loyal readers fairly often. I wish she would not be offended. The Sage Grouse is not always disciplined and linear. I do that at my day job. Ideas sometimes take a flourishing life of their own, often as a side trip, and sometimes (too often say some critics) I give them a public life. I was going to write about how we taxpayers paid for Dick Cheney’s new heart, but I wandered off. Just ignore the parts you don’t like and work with the parts you do like. It is the role of The Sage Grouse to inject some humor into people’s lives, but what is humorous is often in the eye of the beholder. Dick Cheney, whether you like him or not, illustrates some of the issues. He is not young; heart transplants are hugely expensive; public funds paid for it, I am quite certain.

  7. The primary difference between car insurence and Obama care is that car insurence is madated by the states. Police power such as forcing someone to buy something is reserved to the states. If any state wants to mandate health insurence then they should do it, no state has chosen to do so….. maybe because when you look deeper it is not a great idea…. Maybe it is a great idea but people don’t like it, so we should look for a better alternative. Either way, the federal government should only concern itself on things upon which a large majority agree upon…. As long as we use it to enforce a moral code the country will remain split as to whose we enforce.

  8. Hey Sage grouse, I was really interested in the column but you lost me when you rimmed off on your personal political vendetta, which doesn’t interest me at all. Stick to the topic, how about…if you’re truly interested in solving a problem.

  9. Superb! If only we can transition someday to single payer. Talk about needing control. One of the pills I take formerly cost me about a penny apiece through my (rather good) insurance. The pharmaceutical company decided they could better be sold over the counter, so now the insurance doesn’t pay for them, and they are a dollar apiece. They used to come in a pill vial, but now they come in a punch-out metal-foil container in a box, so the packaging companies can make more money on them too. This kind of manipulation will end only if health care undergoes a total remake.

  10. Insurance = Socialism. Think about it. Everyone bands together into a risk pool and pays a moderate amount of money into it, knowing that someday, they might need to tap that fund for medical emergencies.
    The U.S. model (pre-Obamacare) is badly warped in that for-profit companies have grabbed administrative responsibilities and have their very own “death-panel” bureaucrats who arbitrarily decide who to deny or cut-off, all the while collecting billions from the suckers. This is a really great model if you’re an over-paid CEO, but not so much if after years of paying, you find yourself cutoff, going bankrupt, foreclose your house and just-go-away-and-die-without-undue-fuss.
    Wanna save money on health care? Get an instant 30 percent savings by going single payer (Medicare) and get rid of all the private insurance company bureaucracies and fat-cat CEOs who add zero added value to the deal.

  11. When my husband and I planned for an early retirement we were both in our 50’s. Not only were we retiring, but we were moving to Nashville, TN. Since we resigned from our jobs, we knew we would have to buy health insurance and dental insurance in Tennessee. We purchased a PPO family plan, for just my husband and me, through “Penny Health” . We paid for the family plan ourselves, initially, the cost was a little less than $400 a month for both of us. Our co-pay was very reasonable at $25 each per office visit.